A grow­ing mar­ket

The in­creas­ing num­ber of ‘oldies’ is fu­elling the res­i­den­tial mar­ket.

Finweek English Edition - - Contents - By Glenda Williams

south Africans aged 60 and over com­prise 8.1% of SA’s 55.5m pop­u­la­tion, ac­cord­ing to Sta­tis­tics South Africa. And cour­tesy of the al­most 10-year in­crease in the life­span of the av­er­age South African, they are liv­ing longer. SA’s el­derly are an in­creas­ing per­cent­age of the pop­u­la­tion, the over 60s group grow­ing at a com­pound an­nual growth rate of 2.7%.

“The per­cent­age of South Africans over the age of 60 is set to dou­ble to 15.4% of the to­tal pop­u­la­tion by 2050. How­ever, the mar­ket has not yet pro­vided suf­fi­cient hous­ing stock to meet th­ese needs – ei­ther in terms of the num­ber of peo­ple or the type of lifestyle cur­rently favoured,” says San­dra Gor­don, se­nior re­search an­a­lyst at Pam Gold­ing Prop­er­ties.

The older gen­er­a­tion is al­ready fu­elling the hous­ing mar­ket. Buy­ers over the age of 50 years in­creased to 33.06% of to­tal buy­ing at Au­gust 2017, up from 22.09% in 2007, says Jo­han Loos, house­hold and prop­erty sec­tor strate­gist at FNB.

GROW­ING DE­MAND

Pre­dictably, de­vel­op­ers, in­vestors and even JSE-listed com­pa­nies ap­pear to have more of an ap­petite for re­tire­ment prop­er­ties than they might have had in the past.

De­mand for qual­ity ac­com­mo­da­tion among the grow­ing num­bers of mid­dle- to up­per­in­come re­tirees is swiftly out­strip­ping sup­ply, says James Wil­son, CEO of the Amdec Group, a pri­vately owned prop­erty de­vel­oper and in­vest­ment com­pany.

Among the Amdec Group’s 12 brands is its award-win­ning Ev­er­green Lifestyle Vil­lage brand.

Ev­er­green re­cently part­nered with PSG Al­pha In­vest­ments, which has ac­quired a 50% stake in the re­tire­ment brand. The PSG deal with its R675m cap­i­tal in­jec­tion will aid in

ac­cel­er­at­ing the Ev­er­green of­fer­ing from the cur­rent 500 homes to around 3 000 over the next three years.

The goal be­yond seven years is 10 000 units. “Scale is im­por­tant as this al­lows us to keep our levies low,” Ev­er­green Re­tire­ment

Hold­ings CEO Arthur Case tells fin­week.

Aside from ex­ten­sions in all cur­rent vil­lages, Ev­er­green is de­vel­op­ing 950 units in the West­ern Cape, 485 units in the KwaZulu-Natal (KZN) Mid­lands, and 800 in Port El­iz­a­beth. The brand also re­cently ac­quired land in Umh­langa Ridge in KZN where 640 units will be con­structed.

Mean­while, JSE-listed Bal­win Prop­er­ties is de­vel­op­ing 307 re­tire­ment units in Paarde­vlei in the West­ern Cape while Pem­bury Lifestyle Group (PLG), the first JSE AltX-listed en­tity with a re­tire­ment sec­tor of­fer­ing, op­er­ates six re­tire­ment fa­cil­i­ties un­der its Pem­bury Lodge brand and aims to in­crease that port­fo­lio to 16 prop­er­ties.

LIFESTYLE CHANGES

The shift in how the older gen­er­a­tion chooses to live dur­ing re­tire­ment has meant that re­tire­ment prop­erty of­fer­ings have evolved rad­i­cally. They are a far cry from the typ­i­cal oldage home of yes­ter­year.

To­day se­cure, up­mar­ket re­tire­ment prop­er­ties are ex­pected. That could mean ur­ban lock-up-and-go apart­ments, sec­tional ti­tle com­plexes or re­tire­ment vil­lages. In­creas­ingly,

they are look­ing to lifestyle es­tates to pro­vide safe, su­pe­rior re­tire­ment ac­com­mo­da­tion, as well as ac­cess to med­i­cal fa­cil­i­ties and so­phis­ti­cated lifestyle ameni­ties.

“Baby boomers are liv­ing 10 to 25 years longer than their par­ents, and opt­ing for a more ac­tive lifestyle, so there is no de­sire to live in a typ­i­cal old-age home,” says Ja­son Shaw, na­tional sales ex­ec­u­tive for Pam Gold­ing Prop­er­ties.

Re­tire­ment prop­er­ties are spring­ing up around the coun­try. New sec­tional ti­tle re­tire­ment es­tate La Vie Nou­velle in Broad­acres, Four­ways, of­fers an ex­clu­sive lifestyle as well as a com­pre­hen­sive frail care and med­i­cal cen­tre. Set to open its doors in De­cem­ber is Lone­hill Manor in Lone­hill, of­fer­ing a range of free­hold, sec­tional ti­tle, as­sisted liv­ing and frail care ac­com­mo­da­tion.

In the pipe­line at Steyn City, the colos­sal 809ha mixed-use res­i­den­tial es­tate north of Four­ways, are 400 re­tire­ment homes in part­ner­ship with a spe­cial­ist re­tire­ment vil­lage de­vel­oper.

Among the many re­tire­ment prop­er­ties along KZN’s North Coast are those in the Sibaya precinct and For­est Vil­lage on the Bret­ten­wood Coastal Es­tate.

What will pos­si­bly be­come the Ev­er­green brand’s flag­ship will be its Val de Vie of­fer­ing in Paarl in the West­ern Cape. Lo­cated in the pres­ti­gious Val de Vie lifestyle es­tate will be a re­tire­ment scheme of 400 houses and 200

“Buy­ers be­low the age of 50 are also giv­ing in­creas­ing con­sid­er­a­tion to ac­quir­ing a prop­erty with a view to their fu­ture re­quire­ment. Such a home can be rented out un­til they wish to move in.”

apart­ments, as well as a frail care fa­cil­ity and club­house, says Val de Vie’s mar­ket­ing di­rec­tor Ryk Neeth­ling.

“Its set­ting in the cen­tre of the Val de Vie es­tate will not only pro­vide a safe and se­cure en­vi­ron­ment, but will en­sure an in­te­grated rather than sep­a­rate lifestyle,” he ex­plains.

In keep­ing with the rest of the es­tate, the of­fer­ing will be a world-class one, Neeth­ling tells

fin­week. Here the en­try-level for a 128m2 twobed­room, two-bath­room free­stand­ing house will be priced at R2.9m with levies (which also cover ba­sic med­i­cal care) of R3 325 per month. With its own bore­holes and fil­tra­tion plant, the es­tate will be to­tally in­de­pen­dent of mu­nic­i­pal wa­ter, adds Neeth­ling.

Says Case: “At an av­er­age price of around R3.5m for a three-bed­room home, it is the best way to get into the Val de Vie es­tate. Not only do you have ac­cess to all the Ev­er­green ben­e­fits but all the Val de Vie fa­cil­i­ties as well.”

IN­VEST­MENT PROPO­SI­TION

Aside from of­fer­ing out­stand­ing life­styles for re­tirees, re­tire­ment prop­er­ties in es­tates have also be­come an at­trac­tive in­vest­ment propo­si­tion, even for younger buy­ers.

“Ac­cord­ing to New World Wealth, es­tates with re­tire­ment hous­ing are grow­ing in pop­u­lar­ity. With many re­tirees not in a po­si­tion to pur­chase a home, there is a thriv­ing rental mar­ket in the sec­tor,” says Gor­don.

“Buy­ers be­low the age of 50 are also giv­ing in­creas­ing con­sid­er­a­tion to ac­quir­ing a prop­erty with a view to their fu­ture re­quire­ments. Such a home can be rented out un­til they wish to move in,” adds Shaw.

The pur­chase of a re­tire­ment prop­erty as an in­vest­ment should be ap­proached in the same way as any other prop­erty in­vest­ment, says

May­stone Wealth’s Kevin Joss. “You have to look at sup­ply and de­mand as well as yield and com­pare this to other buy-to-let prop­er­ties.”

But the buy­ing of a re­tire­ment prop­erty is more of­ten than not about a lifestyle in­vest­ment rather than a fi­nan­cial in­vest­ment. This is par­tic­u­larly true of prop­er­ties pur­chased through the life rights model where the cap­i­tal in­vest­ment is one that does not grow.

Ev­er­green, which in­tends list­ing in around three to four years, adopts this model. “It’s a good busi­ness model and the pri­mary one used around the world. Ev­er­green sells a lifestyle. With the life rights model the de­vel­oper man­ages the vil­lages and re­mains com­mit­ted for life. The life rights model is al­most like an in­sur­ance pol­icy. It al­lows us to de­liver the lifestyle re­tire­ment dream and when you need it, care with dig­nity,” Case tells

“You have to look at sup­ply

and de­mand as well as yield and com­pare this to other buy-to-let prop­er­ties.”

An artist's im­pres­sion of Ev­er­green's re­tire­ment of­fer­ings in the lux­ury Val de Vie es­tate in the Cape Winelands.

San­dra Gor­don Se­nior re­search an­a­lyst at Pam Gold­ing Prop­er­ties

James Wil­son CEO of the Amdec Group

John Loos House­hold and prop­erty sec­tor strate­gist at FNB

Ryk Neeth­ling Mar­ket­ing di­rec­tor at Val de Vie

Kevin Joss Co-owner of May­stone Wealth

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